The FTSE 100 Index rose nearly two per cent – up 73.41 points to 4226.10 – with the Thanksgiving holiday in the United States giving stocks some welcome breathing space.

New figures showing an easing in the recent pace of house price falls helped to bolster a number of beleaguered stocks in the housebuilding sector.

The monthly update from the Nationwide building society saw Taylor Wimpey shoot up by 73 per cent, with impressive gains notched up throughout the sector.

Banking and insurance stocks were responsible for much of the improvement in the top flight, while sentiment was also boosted by a surge for the energy sector after oil prices remained above $50 a barrel.

BP rose more than three per cent, or 171/2p to 5301/4p, and Royal Dutch Shell cheered 76p to 1696p.

Among insurers, Prudential and Aviva rose nine per cent and seven per cent – 26p to 322p and 233/4p to 3801/2p respectively. Meanwhile Barclays added 6.9p to 166.9p, Royal Bank of Scotland was 2p higher at 55p and Lloyds gained 4p to 164p.

Standard Chartered proved the exception after shares dropped 181/2p to 766p.

Traders said that the Thanksgiving holiday in the United States meant that business was slightly subdued in London.

Aside from the recovery by financial and oil stocks, investors were looking closely at the retail sector following the collapse of Woolworths and MFI and after trading updates from B&Q owner Kingfisher and Currys chain DSG International. Kingfisher was one of the Footsie's biggest fallers, off two per cent or 2.9p at 116.6p, after it reported a nine per cent drop in like-for-like sales for its B&Q business.

Half-year losses of £30m and a gloomy trading update put further pressure on DSG, which saw its shares tumble another 11/2p to 121/2p in the second tier. FTSE 250 rival Kesa Electricals, which owns the Comet chain, improved 71/2p to 791/4p.

In the housebuilding sector, FTSE 250 firm Taylor Wimpey jumped 4.22p to 10p. Barratt Developments followed suit with an improvement of 5p to 50p.

Leisure and activity break specialist Holidaybreak saw its shares advance by 9p to 176p, despite announcing a dividend cut and saying that trading conditions in its city breaks arm had become more challenging amid the economic downturn.

Retailer Moss Bros saw shares plunge 37 per cent, or 10p to 17p, after billionaire Sir Philip Green ruled out an imminent bid for the company.

The biggest Footsie risers of the day were Xstrata, ahead by 1041/2p at 959p, Kazakhmys advanced by 28p to 269p, Wolseley climbed 291/2p higher to 2983/4p, while Vedanta Resources finished the day ahead by 591/2p to 6121/2p.

The biggest fallers of the session were Centrica, which declined by 8p to 232p, AstraZeneca was off by 62p at 2322p, Standard Life was down by 61/2p at 2543/4p, while Kingfisher ended the day 2.9p lower at 116.6p.